According to a research report issued by Soochow Securities, as a leading digital IC design company in China, Shanghai Fudan (01385) product line covers five major directions: security and identification chips, non-volatile memory, smart meter chips, FPGA chips and integrated circuit testing services. The bank expects its 2023-25 net profit to be 11.5 Universe 14.4 / 1.7 billion yuan, a year-on-year increase of + 7%, 25% and 19%. Taking into account the company's core competitiveness and good FPGA business growth, the market has released pessimistic expectations for 2023, covering the "buy" rating for the first time.
The main points of Soochow Securities are as follows:
FPGA business is growing rapidly, and the long-term space is considerable.
The company is the first batch of domestic enterprises to develop FPGA, and developed the first 28nm billion door-level FPGA products in 2018. Products focus on highly reliable areas, can be used in AI computing, satellite Internet and other fields. The company's revenue from FPGA and other chip businesses in 2022 was 803 million yuan, a year-on-year increase of 88%. According to Frost&Sullivan data, in 2021, the size of the global FPGA chip industry is about 6.86 billion US dollars, + 12.8% compared with the same period last year, and the overall localization proportion is relatively low. As the key to enhance computing power, FPGA is the core component downstream such as satellite Internet, and is expected to benefit from the development of the industry.
The storage inflection point has arrived, and the company's non-volatile storage business is growing rapidly.
The company also has the design and mass production capacity of EEPROM, NORFlash and SLCNANDFlash, and the capacity covers 1Kbit-4Gbit. The company's EEPROM products have accumulated a large number of customers in the fields of smart meters, automotive electronics and mobile phone camera modules. NANDFlash products are widely used in computers and peripherals, mobile phone modules, security monitoring, IoT and many other fields. Storage business income of 940 million yuan in 2022, with the volume of downstream applications, while following the inflection point of industry prices, is expected to continue higher growth.
The security and identification business is basically stable and growing steadily.
The company has formed three product families: RFID and memory card chip, smart card and security chip, and intelligent identification device chip, benefiting from the trend of the Internet of everything. In 2022, the company's security and identification chip business revenue of 976 million yuan, year-on-year + 12.7%, the past performance is solid.
The company is expected to benefit from the replacement cycle of smart meters.
The company is the leader of domestic smart meter MCU, ranking first in the market share of individual smart meters in the State Grid. By the end of 2021, the cumulative MCU shipments of smart meters have exceeded 400 million, covering most of the domestic watch factories. At the same time, the company has entered into new fields such as automotive electronics, striving to explore growth points.
Risk hint: the industry competition aggravates the risk, the demand is lower than the expected risk, and the new product expansion is not as expected.